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New Developments in Public Employee Labor Relations (PERB), Pensions and Initiatives

August 18, 2014 by

In the past several weeks, a number of decisions provide challenges, opportunities, and fodder in the law of public employee labor relations, retirement security, and the initiative process. Each of these developments arise from the adoption of charter amendments by cities or counties through ballot measure or initiative petition,* and have serious implications for local public employee labor relations

 Ventura County Pension Elimination Initiative Forced Off the Ballot

In Ventura County, the Superior Court removed from the ballot a voter initiative that attempted to eliminate the county’s pension system.  Ventura County is a “’37 Act” county, having adopted the state’s 1937 County Employee Retirement Law (“CERL” or “1937 Act”).  The voter initiative, for which the proponents received out-of-state funding from various corporate-backed, anti-union and anti-pension groups, including the Arnold Foundation, attempted to replace county employees’ pensions with a 401(k)-style defined contribution plan.  The initiative would have also imposed a five-year cap on county employee salaries.  The court ordered the initiative removed from the ballot because, although the 1937 Act permits counties to adopt its provisions, it contains no provisions permitting a county to opt-out, freeze or terminate the pensions system.  Noting a local initiative cannot accomplish what the governing body itself cannot accomplish, the superior court found the initiative fatally flawed.  The court also found the initiative violated the single-subject rule, because it contained both the pension-related provision as well as the salary cap.  The case is Lacey v. Lunn, case no. 56-2014-00454309, Ventura County Sup’r Ct.

The Rise of Section 3507 of the Meyers-Milias-Brown Act (MMBA)

PERB has issued an important decision on the duty to bargain under section 3507 which covers changes to local agency employee relations ordinances, including resolution procedures and, specifically, interest arbitration.  In IAF Local 1319 v. City of Palo Alto, PERB Dec. No. 2388-M, the city council adopted a measure to amend the city charter to eliminate interest arbitration, and referred the measure to the voters.  The City invited employee organizations to attend public comment sessions, but declined to negotiate over the measure, asserting that interest arbitration was not a mandatory subject of bargaining.  While section 3505 of the MMBA obligates an employer to “meet and confer in good faith” over employment terms, section 3507 requires a public agency to “consult in good faith” over any changes to its labor relations procedures.  As described by PERB in the decision: “The mandatory subject for consultation specified in section 3507 concern the very system of collective representation established by the MMBA.”

Courts and the PERB have considered, but never decided, what “consult in good faith” means under section 3507.  PERB has now answered that question, holding that section 3507 entails an identical duty to bargain as does section 3505, in other words, true collective bargaining.  PERB “left for another day” how disputes relating to section 3507 bargaining are to be resolved, and whether the processes mandated for section 3505 bargaining would apply.

 Importantly, the case arose in the context of a ballot measure which, under Seal Beach would ordinarily require bargaining prior to its adoption by the City Council and prior to placement on the ballot.  PERB held Seal Beach would apply to ballot measures entailing changes covered by 3507’s duty to bargain because the reasoning of Seal Beach is equally applicable to section 3507.

But isn’t interest arbitration a permissive subject of bargaining? Yes, under section 3505, but it’s now mandatory under section 3507.  In reaching this conclusion PERB reviewed prior court and PERB decisions that held interest arbitration procedures to be a permissive subject of bargaining, and noted that each decision had considered only the scope of representation under section 3505.  Rather, PERB found, section 3507 contemplates negotiating in good faith over labor relations procedures, including impasse and dispute resolution. You can find more articles on labor relations procedures on the Beeson, Tayer and Bodine (BT&B) blog.

Los Angeles’s Unbargained Pension Modifications Ordinance Struck Down

On July 27, the Los Angeles Employee Relations Board, which reviews unfair labor practice charges asserted under the City’s employee relations ordinance, voted to strike down the City Council’s 2012 law that imposed reductions in pension benefits.  The board found the City had failed to bargain with city employee unions before enacting the ordinance.  The City argued it was not obligated to negotiate over benefits applicable to future employees when it adopted a reduced pension tier that provided for lower benefits and a later retirement age.  The City’s position was a novel one, as established state and federal labor-relations laws require bargaining over future employee compensation and benefits.  The City’s employee relations board sided with this precedent. The decision may be reviewed by the superior court.



*A measure is a law adopted by and placed on the ballot by a governing body, for subsequent adoption by the voters; an initiative is a petition signed by voters requesting a law be placed on the ballot, in which case the sponsors of the initiative are the proponent.

The material on this website is provided by Beeson, Tayer & Bodine for informational purposes only and does not constitute legal advice. Readers should consult with their own legal counsel before acting on any of the information presented. Some of the articles are updated periodically, and are marked with the date of the last update. Again, readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.